We need to talk about Christmas…

Set yourself a simple budget to avoid any shocks when the New Year brings new bills (Picture: Adobe)

Readers: I apologise! I know it’s months to the big day, but we need to talk about Christmas this year. I know that a lot of people are worried about their finances, yet with a little bit of planning you can avoid the pitfalls that can lead to debt and disaster in the New Year.

If you start squirreling away a little bit of money now, while managing the family’s expectations, you can have a relatively painless festive season (I can’t help you manage your actual relatives, though).

Here’s my guide. I promise there’ll be no more Christmas tips now until closer to December!

Make a mini-budget

It’s dead easy to budget for Christmas. The key point is to not make things overly complicated. Start by jotting down all of the things you’re likely to spend cash on in the coming months. Rough estimates will do. I’d consider the following things:

• Gifts for family members and friends
• Cards and postage
• The Christmas meal(s)
• Decorations
• Travel
• Entertainment

Drop all of this into a simple spreadsheet – there are lots of free templates online – and work out what your total spending will be. You can use this list to set savings targets each week in the run-up to December. Or have the satisfaction of ticking things off the list as they are done.

Knowing your budget also means you can manage expectations if money is tight. If you’ve got kids, it’s easy to get swept away in their excitement in the final countdown to the big day. If your budget is limited, you can use the next few weeks to explain how Santa is being careful with his cash this year.

Claw back some cash

You shouldn’t have to go without to enjoy Christmas. There are lots of ways to save money or even claim refunds that you might not have thought of.

It’s likely that you are already paying for lots of goods and services that you don’t want or need. These include:

• Subscriptions for things you don’t use.
• Duplicate agreements (like old mobile phone insurance policies, or warranties for things already covered by home insurance).
• Services you only need one of, such as music streaming services, cloud storage and anti-virus software.
• Subscription traps, where you signed up for a free trial and haven’t realised that you’re now paying monthly fees.

Most people will find they can free up savings of around £500 to £1,000 or more by following these tips. Best of all, you can claim back any debits on your account that you haven’t specifically authorised through your card provider or e-payments system.

You may also be overpaying for services like broadband, energy or insurance. Check to see if you are out of contract and negotiate new deals that dramatically reduce your outgoings. I saved £600 a year alone by switching my broadband and TV package.

Get clever with your cash

Don’t let the money you’ve saved vanish into your main bank account. You can set up a new account just for these savings very easily online in about ten minutes.

There are loads of apps available online designed to help you save money, claim cashback and voucher offers while you spend or monitor your weekly spending. I use Hyperjar, which helps me save small amounts in digital “jars”, which I use for my food shop, entertainment and travel. There are loads of other options out there for free too, though.

Most importantly, work out what money you can afford to put aside each week and set up a transfer so the money goes into your new savings account as soon as your wages or credits land in your current account. That way you won’t be tempted to spend the cash. I lock my debit card for my savings account away in a drawer, as I know I am easily tempted!

Martyn James is a leading consumer rights campaigner, TV and radio presenter and journalist. Read more from Martyn here.